Mitigating Labor Costs While Improving Workplace Vitality

by | Jul 25, 2023

Staffing shortages and labor-related costs have significantly damaged hospital margins over the past three years, leading many to shutter service lines or permanently close entire facilities.[1],[2] Rural hospitals have been especially hard hit, with more than 600 estimated to be at risk.[3]

One of the most significant labor-related challenges is the shortage of physicians and other clinicians. It is estimated that over 330,000 physicians, nurse practitioners, physician assistants and other clinicians have now left their jobs.[4] This great exodus has been driven primarily by work overload and burnout.[5]

Hospitals now face an intensely competitive labor market that further pressures their bottom line.[6] According to a recent study, replacing a single physician will cost hospitals approximately $1,262,297.[7] This includes lost revenue ($990,034), recruitment costs ($61,200), and startup costs ($211,063).

Physician turnover costs the industry nearly $1B a year, with a third of the cost attributable by burnout.[8]

A new approach

The challenge for CEOs and CFOs is addressing labor expenses, burnout, turnover, and tight margins while maintaining ideal staffing ratios and providing high-quality care. For many, the answer is to leverage advanced practice providers (APPs) and physician assistants (PAs).

By leveraging APPs and PAs, hospitals can alleviate the stress and workload on existing clinical staff while also filling the gap for facilities facing vacancies.

Benefits of using APPs and PAs

  • Provides around-the-clock resources
  • Offers multidisciplinary expertise
  • Reduces stress on existing staff
  • Improves physician response times
  • Improves patient-physician engagement
  • Enhances the patient experience
  • Promotes higher patient satisfaction scores
  • Reduces labor-related costs

How to choose a partner

When looking for a partner for APPs and PAs, it is important that hospitals find one that aligns with their corporate goals and that embraces the hospital’s team culture. Their APPs and PAs should have undergone intensive training—both didactic and on-the-job—over an extended period. They should also provide mentorship for their APPs and PAs to ensure that they can successfully function as integrated members of a clinical team.

The best partners also provide ongoing oversight of APP and PA clinical activities. Each APP or PA should be paired with a physician for daily discussions concerning their patients. This is essential as it allows clinicians to ask questions and continue learning. In short, the best APPs and PAs will have received the extensive training and ongoing mentorship necessary to practice at the top of their license.

The time to act is now

The need for physicians is expected to increase as our nation ages. According to the U.S. Census Bureau, one in every five U.S. adults will be 65 or older by 2030.[9] Older adults typically have more chronic conditions that are more complex and require more care. Hospitals should take steps now to build a highly qualified clinical team that can meet the needs of today and tomorrow, despite our challenging labor market.